Synaptics — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Net revenue was $294.0 million, an increase of 1% year-over-year compared to $292.5 million in the prior year quarter.
• GAAP gross margin was 47.8%, compared to 42.6% in the prior year quarter; Non-GAAP gross margin was 54.3%, up from 53.2%.
• GAAP net loss was $17.7 million ($0.45 per basic and diluted share), compared to a net loss of $20.6 million ($0.53 per share) in the prior year quarter.
• Non-GAAP net income was $51.5 million ($1.26 per diluted share), compared to $43.3 million ($1.09 per diluted share) in the prior year quarter.
• GAAP operating loss was $12.7 million, compared to an operating loss of $23.2 million in the prior year quarter.
• Non-GAAP operating income was $62.0 million, compared to $51.5 million in the prior year quarter.
• Cash and cash equivalents were $367.7 million at September 26, 2026, down from $442.5 million at June 26, 2026.
• Total debt (current and long-term) was $838.0 million ($440.1 million current, $397.9 million long-term) as of September 26, 2026.
• Net cash used in operating activities was $15.5 million, compared to net cash provided of $30.2 million in the prior year quarter.
• Net cash used in investing activities was $28.1 million, primarily due to $25.0 million in purchases of intangible assets.
• Net cash used in financing activities was $30.9 million, driven by $30.9 million in equity compensation payments.

Business Segments and Product Lines:

• Introduced the xMCU, a new class of microcontrollers, with the launch of the Synaptics Astra SR200 series to enable larger AI models and richer multimodal workloads on-device.
• Expanded the Synaptics Coralboard ecosystem in partnership with Google Research, making it generally available through partners.
• Announced that Synaptics' capacitive tactile sensing (CTS) module and Astra Edge AI processors are now supported by NVIDIA Isaac Sim and Holoscan platforms.
• Entered into a licensing agreement for automotive LCD TDDI technology.
• Reported broader opportunities for tactile sensing controllers and video interface products in the robotics market.
• Noted growing customer interest in processor and wireless technologies leveraging Edge AI development platforms.

Market and Competitive Landscape:

• Revenue was affected by supply constraints and memory-related demand dynamics across multiple markets.
• Smartphone market softness impacted touch and wireless products.
• The company is focusing on higher-value areas and growing in Physical AI and Edge AI.
• The company continues to build its pipeline in targeted growth markets.

Risks and Challenges:

• Pending acquisition by onsemi involves risks related to regulatory approvals, stockholder approval, and the satisfaction of closing conditions.
• The transaction was restructured from an all-stock to an all-cash acquisition via an Amended and Restated Agreement and Plan of Merger entered on October 1, 2026.
• Supply constraints and industry-wide tightness in memory chips may affect customer development timelines and production schedules.
• Volatility in net revenue from Core IoT and Edge AI product applications due to competition and market cyclicality.
• Dependence on a limited number of suppliers and subcontractors, including manufacturing capacity constraints and yield issues.
• Global macroeconomic and geopolitical conditions, including trade tensions, inflation, and conflicts, may adversely affect customer demand.
• Risks related to the loss of major customers or significant reductions in orders from key clients.

Management Commentary and Tone:

• CEO Rahul Patel stated the company delivered "another quarter of strong design activity and customer engagement in Edge and Physical AI."
• Management noted that despite revenue headwinds from supply constraints and smartphone softness, the company is positioning for profitable, long-term growth.
• The tone reflects confidence in the pipeline for targeted growth markets and the strategic focus on higher-value areas.

Other Key Points:

• Synaptics will not host a quarterly earnings conference call or provide forward-looking financial outlook due to the pending acquisition by onsemi.
• The acquisition agreement was originally announced on June 25, 2026, and restructured to an all-cash transaction on October 1, 2026.
• GAAP research and development expense was $91.0 million, while Non-GAAP R&D expense was $69.1 million.
• GAAP selling, general, and administrative expense was $51.7 million, while Non-GAAP SG&A expense was $28.6 million.
• Acquisition and integration-related costs were $19.1 million in the current quarter, compared to $30.5 million in the prior year quarter.
• Restructuring costs were $8.1 million in the current quarter, compared to $2.5 million in the prior year quarter.
• Share-based compensation was $37.0 million in the current quarter, compared to $36.7 million in the prior year quarter.